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Co-operative societies and rural India

January 28, 2014

India is mainly an agrarian society with more than half of its population still residing in the villages. Rural sector is the major contributor to the overall GDP of the nation and hence lack of development in villages means lack of development in India. Cooperative societies are playing significant role in this and share a major credit in the growth of rural sector which along with government and private sectors contribute to the overall economy of India. Cooperatives cover more than 97%of Indian villages, some run by its members and some by the government

Needs of rural people are served by different forms of private and government organizations including partnership firms, co-operatives, companies and charitable trust. Government each year spends lakhs to crores of rupees on rural development. But co-operatives working in rural areas are playing noteworthy role in this. Gujurat’s Dairy co-operative and Maharashtra’s sugar co-operative prove their contribution.

Cooperatives originated in the West during the middle of the last century and from there these came to India. Formally co-operatives were introduced to India in 1904 when the Indian Co-operative Societies Act was promulgated. Moreover rural indebtedness was the major force behind the initiation of chit funds and cooperatives in India. Initially these were just to provide credits to the farmers in the form of credit societies and gradually these start working in other fields such as banking, processing and marketing. The meager funds of farmers were pooled in to run cooperative and it was an attractive way to solve their financial problems. After independence role of cooperative societies grew to encompass socio-economic development and eradication of poverty in rural India. It became an integral part of five year plan. With this co-operative societies became a fundamental part of our economy.

Non-credit societies came in 1912. Importance of co-operative was also highlighted in the Royal Commission on Agriculture in 1928.  With the formation of the Reserve Bank of India (RBI) in 1935, developing more cooperative societies was given due importance.

Main aim of the cooperative was to get the poor and indebted farmers out of poverty and out from the clutches of money lenders. Within short span of time, role of cooperatives extended beyond agricultural credit. It started covering activities such as production, farming, marketing and processing. Cooperatives are now playing a very significant role in the socio-economic development of our country especially the rural India.

In 1951 there were 1,81,000 cooperatives of all kinds in India and this number increased to manifold within short span of time. During 2007-08 there were 1,50,000 primary credit cooperatives and some 2,60,000 non-credit primary societies of all types. In India there are four major types of cooperatives –

  • The Primary agricultural credit or service societies
  • Agricultural non-credit societies
  • Agricultural co-operative marketing societies
  • Co-operative farming societies

Though the expansion and reach of cooperatives is highly impressive but their way of working is not Except for few co-operative societies most of these lack motivation. These are merely run by the government without motivation and enthusiasm of their members. Some of these even lack in the required funds. Other factors that lead to the slow progress of these societies are – mismanagement, manipulation, restricted coverage, lack of awareness, and political interference. But this does not mean the downfall of the massive projects. Despite all this, cooperatives are really helping poor in becoming self-reliant. Scope of cooperative societies in rural India can improve further with women participation.

Cooperatives provide credit to the farmers, the most needed thing in the farming. Apart from this cooperatives help farmers by providing top quality fertilizers, seeds, insecticides, pesticides etc at reasonable price. Farmers also get marketing, warehousing facility and transportation support from the cooperatives. Service cooperative societies help the poor and marginal farmers with tractors, threshers etc on rent. Rural cooperative societies are now entering into real estate, power, insurance, healthcare and communication sector. If these keep on working with an objective of development then days are not far when quality of rural life would be far better than urban India.

Related Information:

Family planning in India

NGOs in India

NGOs and Rural Development in India


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I am a mother. A wife. And daughter of my loving parents by heart with passion for creativity, zeal to achieve something big in life but want to live life to its fullest.

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Showing 7 Comments :

Thank you for the information. It really helped me in my project.

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thank you for the information. It really helped me.

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PROF.K. PARAMESWARA RAO November 3, 2015 at 8:42 pm

Thought provocating article. cooperatives only help the poor to uplift their socio-economic conditions.

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I am pretty impressed with the article. Is there any book by the author on the subject. If there, kindy email the details to me.
Vivek kale
7738371974
kalevb@yahoo.com

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It is use full for all

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Cecil Macarthur Luther July 4, 2014 at 4:04 pm

An interesting article reflects in-depth knowledge and finesse.
I am a journalist who is into the profession for the past 30 years and keep reading about such articles. Great

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    it’s use full for me and also all Indian.
    that’s great job tnkx very much once again thanx…….. ..

    Reply